DisCos can now purchase power directly from GenCos as Nigerian govt removes NBET as ‘middleman’

The 11 electricity distribution companies (DisCos) in Nigeria have been given the greenlight by the Federal Government to purchase electricity directly from power generation companies (GenCos) through bilateral contracts.

This development puts an end to the 10-year reign of the Nigerian Bulk Electricity Trading (NBET) which buys electricity in bulk from generation companies through power purchase agreements and sells through vesting contracts to the DisCos.

The National Electricity Regulatory Commission (NERC) in the 2024 Multi-year Tariff Order (MYTO) issued to the DisCos on January 17 said the new order recognises a revision to the DisCos’ partially contracted capacity (PCC) to ensure a minimum energy offtake from January 1.

Accordingly, NERC pegged the minimum energy offtake requirement for the DisCos this year at 4,063MWh/h.

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“The DisCos are required to secure adequate bilateral contracts to facilitate a seamless exit from NBET’s vesting contract regime,” the regulator said.

A partner at Bloomfield Law Practice, Ayodele Oni, who spoke on the development, said: “With the just released 2024 Multi-Year Tariff Order for each DisCo, it would appear that DisCos are now generally allowed to procure bilateral power from generation companies, directly.

“This is in preparation for the transition of the bulk trader, NBET.”

By: Babajide Okeowo

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